Successful Sectors Occupy IPO Calendar
The IPO market continues its step towards stability in the
upcoming week with three impressive deals on the launching
pad. Right now, some of the years hottest sectors are
represented on the calendar that ranges from healthcare to
an oil and gas entity. Current market conditions have continued
to play an integral role in the path underwriters have decided
to embark on with respect to future deal transactions.
Unit Partnership Heads Group
At this point, sources tell us that the deal to watch happens
to be the limited partnership transaction from Penn Virginia
Resource Partners (NYSE: PVR). Underwriters for the recently
revised offering include Lehman Brothers, UBS Warburg,
Banc of America Securities, Dain Rauscher Wessels
and Wachovia Securities. Officials tell us that the
transaction is expected to price Wednesday. Unlike most offerings
that debut, Penn Virginia is not a growth play. This transaction
rewards investors through a handsome dividend and therefore
the hitch for this offering is to hold the issue for the intermediate
Penn Virginia has all of the tools necessary to succeed in
this environment and considering that most deals in the current
climate cut proposed structures, this deal is expected to
fare well. Initially, Penn Virginia filed to sell five million
shares in the limited partnership. Subsequently, overwhelming
demand for the issue forced the underwriting group to bump
up the number of shares to 6.35 million. As pricing drew closer,
Lehman filed another amendment on the transaction by increasing
shares to 6.5 million. This time, the anticipated range on
the deal was raised to $19.50-$21.50, up from $19.00-$21.00.
The limited partnership was conceived to engage in the management
of coal properties in the Central Appalachian region of the
United States. According to the United States Department of
Energy, in 2000 coal-fired power plants generated approximately
52% of the electricity in the U.S. compared to 20% for nuclear
power plants and 16% for gas-fired properties.
Compared with the overall market, the specific performances
of some unit trust partnerships that have been formed to own,
operate and acquire a diversified portfolio of energy assets
has been recently winning over the hearts of Wall Street investors.
The bonus here is that when interest rates decline, the fixed
mechanism of a dividend makes the attraction of a unit partnership
more compelling to new and existing shareholders.
Energy Partners (NYSE: WEG) is the second best IPO in
2001, achieving an aftermarket rise of 86%. Earlier this year,
Lehman Brothers led the pricing of four million shares at
$21.50. While WEG started off slow, the stock has gained momentum
on Wall Street because investors see a huge opportunity to
invest in stocks that pay attractive dividends.
With respect to Penn Virginia, the firm plans on a quarterly
distribution of $0.50 per unit to the extent it has sufficient
cash from operations after paying fees and expenses. If the
stock is priced at the high end of the range, the stock will
boast a dividend yield of 9.3%.
Shares of Principal Financial Group (NYSE: PFG) debuted
Tuesday. Despite a huge share float, the stock rose TK% to
$TK. Goldman Sachs (NYSE: GS) led the underwriting
which priced shares at $18.50 Staff Analysts